Labour announces NZ Power plan with standardised bills, single state buyer and breakup of 'gentailers'; NZ First dumps Williams

Labour announces NZ Power plan with standardised bills, single state buyer and breakup of 'gentailers'; NZ First dumps Williams

By Bernard Hickey

With 24 days to go until the September 20 election, here's my daily round-up of political news on Wednesday August 26, including Labour's formal announcement of its KiwiBuild policy and a poll result showing Colin Craig's Conservative Party nearing the 5% threshold.

National's support fell 2.5% to 45%, leaving it needing the support of New Zealand First to govern.

Conservative disclosed on its Facebook page that its support had risen to 4.6% in the 3News Reid Research poll due to be published early on Wednesday evening. The poll was conducted in the week following the release of 'Dirty Politics'. Conservative's support rose 2.1%.

The poll found support for National fell 2.5% to 45%, while support for Labour fell 2.6% to 26.4%. New Zealand First support rose 1.7% to 6.3%, suggesting the 'Dirty Politics' book helped the minor parties more than Labour.

The poll also asked whether Prime Minister John Key should stand down Justice Minister Judith Collins as Justice Minister. It found 63% said he should stand her down, while 28% said he should not. It found 43% of National supporters thought he should have stood her down.

"Tonight’s 3News-Reid Research poll shows Dirty Politics has given the political landscape a real good shake.  Not only does it have the Conservatives nearly at five per cent – there are also significant results for some of the other parties," said 3News Political Editor Patrick Gower.

KiwiBuild policy released

Meanwhile, Labour formally released its Home Ownership Policy, which includes a plan to build 100,000 starter homes in 10 years.

The main elements of the policy included:

  • The Government building 100,000 new homes aimed at first home buyers in 10 years,
  • Reforming monetary policy to lower interest rates,
  • Introducing a15%  capital gains tax for rental property investors and banning sales of existing homes and land to non-residents,
  • Introducing a National Policy Statement on affordable housing under the Resource Management Act to speed up consenting and increasing land supply,
  • Homes would sell for between NZ$200,000 for apartments or terraced style housing outside Auckland, and NZ$460,000 for standalone dwellings in high demand areas
    of Auckland. The nationwide average (mean) price would be about NZ$340,000,
  • Investing NZ$1.5 billion initially to kick-start the programme, with the programme becoming self-sustaining within three years as houses are sold
  • Houses will only be sold at cost to first home buyers, who must live in them for an undetermined time,
  • Houses would allocated by ballot in areas where demand exceeds supply
  • Labour would look to introduce longer term mortgages into the market, beyond 5 years.

Labour Leader David Cunliffe and Housing Spokesman Phil Twyford launched the policy at the Hobsonville development in Auckland.

Cunliffe said a couple earning NZ$75,000 a year would be NZ$200 a week better off under Labour if they bought a two bedroom terrace home built through KiwiBuild than if they bought a NZ$485,000 home under National's first home buyer subsidy scheme and interest rates rose to 8%, as the Reserve Bank has forecast.

"National’s policy to give grants to first home buyers to buy new build homes does nothing to address supply and rein in runaway house prices. In fact it will likely push prices higher," Cunliffe said.

"In contrast, Labour’s KiwiBuild policy will build 100,000 new affordable homes over ten years and sell them at cost to first home buyers. Using the purchasing power of the Government and off-site building techniques we will be able to lower the cost of building a home," he said.

National Housing Minister Nick Smith said Labour's policy was a "joke", a "shambles" and Labour's launch of its policy at Hobsonville only highlighted its failings while in Government from 1999 to 2008.

Launching the policy in Hobsonville only served to highlight Labour’s previous failings.

“Labour in government announced a 1600-home development on this land in 2002, but by 2008 had no planning approved, no resource consents, no infrastructure built nor a single house constructed," Smith said.

“If they couldn’t build 1600 houses in six years, how can they promise 10,000 a year now under KiwiBuild?," he said.

Internet Mana List

Meanwhile, Internet Mana released its list of 32 candidates for the election, including Hone Harawira, Laila Harre, Annette Sykes, John Minto and Chris Yong in the top 5.

It said Mana candidates Georgina Beyer (Te Tai Tonga), Jordan Winiata (Te Tai Hauāuru) and Kereama Pene (Tāmaki Makaurau) would contest electorate seats only.

The youngest candidate, Beverley Ballantine (23) was placed at number 10 on the list, while the oldest, Angeline Greensill (66) was placed at 11.

NZ Power policy and National's new NZ$150 million rural broadband plan.

David Cunliffe formally re-announced Labour's NZ Power policy in an event in Rotorua yesterday, including a plan to standardise electricity bills and an investigation into pre-pay electricity contracts.

Cunliffe said the electricity market was clearly broken.

"With falling demand for electricity, prices should be going down. Instead prices are going up and companies are extracting excess profit," he said.

"We are sick of hearing every time there is a power hike its everybody's fault but the power generators and retailers. It’s either line companies or lake levels or something else," he said.

The policy of creating a single Government-owned buyer of wholesale power would reduce electricity charges by NZ$500 million to NZ$700 million, Labour said. It added generators and retailers would be structurally separated, with each generator paid a price set by the Government based on costs.

"The current pricing model will be dumped. Each generator will be paid a fair return for their actual costs. The fair return will be calculated by NZ Power on the basis of their historic capital costs, possibly adjusted by inflation, plus operating costs like fuel, depreciation and maintenance," the policy said.

Williams dumped

New Zealand First Leader Winston Peters surprised a few people (including a few of his own MPs) by belatedly releasing his Party List . Former North Shore Mayor Andrew Williams, who had been number 3 on the list,  was dumped completely and Asenati Lole-Taylor was demoted from seven to 16.

Telecommunications Minister Amy Adams announced a re-elected National Government would establish a new NZ$150 million fund to extend its Rural Broadband Initiative.

She said National would legislate a three-year extension of the current Telecommunications Development Levy of $50 million a year to create a new $150 million extension of the Rural Broadband Initiative

Housing Minister Nick Smith released MBIE estimates of the numbers of first home buyers who would take up the Government's expanded HomeStart subsidy package, including an uptake in provincial areas of 34,400 in the five years to 2019, out of a total uptake of 91,824. The provincial areas listed did not include Auckland, Wellington and Christchurch.

Darien Fenton released Labour's Tourism policy, which included little that was specific or new or different from Government policy. It did however take a dig at MBIE, saying the Tourism sector had lacked the top level support and recognition it needed since being wrapped into MBIE.

“Labour will look at how well MBIE is actually serving our tourism industry and work with stakeholders to ensure their needs are being met, and we’ll collaborate with the industry to implement the Tourism 2025 strategy," Fenton said.

(Updated with Craig poll result, full 3News results, Labour KiwiBuild launch and Internet Mana list)

I'll update this regularly through the day.

See all my previous election diaries here.

See the index for Interest.co.nz's special election policy comparison pages here.

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31 Comments

Well, Bernard, you could always Help the Cause by figgering out a way to harness the power of Vituperative Electrons whizzing around on the Crim Dot threads, the rotational energy of Ancestors Spinning in their Graves, and the general Heat/light imbalance one spots (very occasionally).
 
Why, line (sorry) 'er all up now, and ya gets to be Recompensed at Market Value when the LabGreenManiacs go and Nationalise everything in sight!

The LabGreenManiacs might be smart enough to not buy back the power generation companies or if they do make sure it is after they have legislated the amount they can make.  For once the Gov could get something at fire sale prices. 
 
Surely a LabGreenManiacs is a better option than a party leader who devours the flesh of babies born into poverty?  This election its a choice between the maniacs and the baby eaters! 

Its what I would do (legislate first) .  I think its pretty siimple actually, somone wrote in here that all you really have to do is force them to value their inflated assets using a more reasonable method and I suspect we might see there is a 40% over the top charge.
I'll see if I can find the article/comment.
 

Here you go.
http://www.interest.co.nz/opinion/64189/geoff-bertram-proposes-nz-regula...
"That sum, which had risen to $12 billion by 2012, represents the present value of the amount by which those companies’ profits are above what would have been needed to give them a fair return on all the money they have paid out, both to acquire their generation assets back in the late 1990s, and to install new assets since then.
I pointed out that if one of the standard models of regulation used overseas had been applied here at the time ECNZ was broken up in the 1990s, most of those asset revaluations would have been prevented, because the industry’s ability to price-gouge its captive customers and capitalise the resulting profits as “fair value” would have been blocked."
8><----
"On the basis of the 2012 gentailer balance sheets, write-downs could total up to $12 billion, and revenue reductions could be well over $1 billion per year."
 

Yep, here's another expert saying much the same thing;
He does agree with Labour and the Greens that electricity reforms to date have failed to deliver sufficient benefits to residential customers. Residential electricity tariffs have sprinted away since the late 1990s at a far greater pace than the rise in either wholesale market prices or the tariffs enjoyed by industrial and commercial customers.
But a single buyer won't fix that.
Rather, he would regulate the hell out of the monopoly national grid owner, Transpower, and the local electricity network monopolies. Because even though he's a market kind of guy, Wolak is no fan of New Zealand's "light-handed regulation".
"Light-hand regulation is no regulation," he says. Instead, New Zealand should "man up and regulate" in areas where no competition can occur.
Wolak is also no fan of New Zealand's vertically integrated generator-retailers, which does put him on-side with the Labour-Greens NZ Power policy.
Electricity businesses that both make and sell their own electricity have "too many places to hide the money" from external observers trying to work out exactly how their business models work. That makes intensely competitive market conditions and strong regulation all the more important.
 
http://www.stuff.co.nz/business/opinion-analysis/8989538/Labour-Green-el...
 

Great post Kate, and that link is a real find.  I like the suggestion "man up and regulate".  What a great line.
We do need some serious regulation.  But I am not much in favour of Labours approach.  We need government to be a referree and not a player in the market.

Totally agree. Funny thing is - I was in government at the time they were first trying to fix the problem that deregulation had caused with respect to Telecom's monopoly (late 90s, early 2000s). I laughed when I read that phrase "man up" - as my recollection was those policy wogs who knew better were indeed extremely vociferous when anyone suggested even the remote possibility of regulation.

Hi Kate
Just imagine going into the supermarket or the warehouse. You get your stuff and go to the checkout.
They say thats $80 pluss the cost of providing a building for you to shop in pluss fire service levies pluss GST,. That will now be $150
 
Splitting the power companies into Lines and Retailers was just to please the greedies. It gives them a double bite at the cherry
As a single company they add profit once but split into two companies they can justify two lots of profits.
 

Exactly, Mike. Indeed it was the same timing and team of policy folk mentioned above that did Max Bradford's electricity reforms as well;
http://www.maxbradford.co.nz/national_news/electricity/2001-10-15_electr...
 

you'd need a party with guts to do that - and no TPPA.
Passing that legislation is a red flag rort under TPPA, you'd be sued for many millions.

T'were two pollies, Cunny and Parker

(Though electoral prospects grew darker)

Electrons! One Buyer!

We'll Resell, but Higher!

Monopoly! Sweeter, not Starker.....

Hey Bernard - posted on the RockEnrol facebook page yesterday - a list of current sitting MPs who got their tertiary education for free before fees were introduced in 1989;
 
https://d3n8a8pro7vhmx.cloudfront.net/students/pages/133/attachments/ori...
 
A simple but thought-provoking graphic.  Worthy of inclusion in one of your daily updates.
 

Gotta pull you up on that Kate
You are propagating a myth
I went through University well before they introduced "fees"
Entered University on a Fees Bursary
Mucked around
Partied hard
Lost my bursary
Faculties fairly ruthless kicking you out if you missed papers in first 2 years
 
Fees thereafter
Tight supervision
Took some time off
Determined to finish something I'd started, one-way or another
Went part-time
Took 10 years - but I got there in the end
It cost - I paid - wasn't cheap

So you could have had it free via the bursary provided you passed all your papers in the first two years?

Yeah - but I was wondering how many of those MP's on the Facebook list didnt get straight through first go - fees free - there was a pretty high attrition rate in my day - you make the assumption that all of them got through free of any fees

Limited seats, needed to qualify via high school GPA and/or entrance-test levels to be fully funded by the taxpayer and a really high attrition rate - that's also how it was when I went to uni in the US.  Education wasn't a "market" then and indeed, in my experience, the competition (by students to keep their seats) was serious stuff.  I was always in the top 10% of my high school in terms of GPA - what a shock when I did get to uni and found a 35,000+ undergrad population - all of whom were as smart (and most smarter) than me :-).
 
Like you, I partied hard until I got my very first mid-term exam results. That was a wake up call for sure.
 
Re the point about the assumptions made re the politicians on that list - it's splitting hairs, I think. The free tertiary education was there for those committed to their education - and if not, it's completely reasonable that the taxpayer should not pay them to party hard :-).
 

I made the mistake of taking a degree'd family friends advice and avoided the parties and drinking.

Sadly that meant I also missed out on 95% of the university support structure. Which in 87 wasn't directed around seeing the student succeed.  It was about professors doing research and having to make a certain number of student hours to hold their funding.

IF I had been more socially active I would have had contacts.
IF I had been more socially active I would have had support people.
IF I had been more socially active I would have had an information network that clued me up to some of the "everybody knows" things which the university just assumed were common knowledge.
IF I had been more socially active I would have had input from many different walks of life and ways of approaching the problems that were holding up my studying.

Instead my college had just taught me to behave or be punished.  When I spent too much time in the computer lab (4 computers) they banned me from computers for two terms.  This did not help my career progression.  OTBT was seen as anti-authoritian, as was asking questions the college teachers didn't know the answer to (being a "smart arse" was a fast way to get detention, even more than fighting or trowing things in class).
 I should have realised at the time, but the school system I was exposed to was so blinkered, that something was amiss when the college was unprepared for 5 students who wanted to be professional engineers.  They had never had more than 1 before, and never more than 3 seeking to go to Canterbury... although when asked (politely) it turned out they'd never had more than 12 seventh formers before, and so 35 students in my year completely overwhelmed their system and resources....  But that was back when I had been taught teachers knew the correct answers...(even though we were teaching the Computing teacher how to program...) 

We are truely rorted by the electricity industry.  (thats the polite description).  It's a crony monopoly par excellence.
But I don't think that Labour have it right.  We need the Government to be a decent referee, but not a player in the market.
The theft of NZers cash via such things as the revaluations has been spectacular.  So the new regulations could be that the power stations are regarded as items that are deteriorating.  i.e.  no value at all.  Then if prices are based on cost then power prices could be about one third of what they are now.
Which would be fair.

I'm no expert on the economy, but wouldn't such a system result in no money being available to upgrade the generators when the current one breaks down / wears out?

My limited knowledeg of the electricity industry suggests that power costs varying amounts to produce/ transmit at different times, charging consumers the actual cost of power could result in wild variations in your power bill between months even if your power consumption stayed the same.

An individual unfortunate enough to use power mostly during peak times and/or when the weather is cold might get a very spectacular case of bill shock. Common folk would essentially need to be given the minute by minute pricing of power inorder to make informed decisions and even then the numbers might look so small that many people don't realise that it will all add up to a significant figure later.

Revaluation goes on for almost everything in the market, why not power companies? By zeroing the value of the power company assets you'd essentially be saying we should reclaim the land on which the generator is built and commit it to more productive use. I'll need a little bit more information on what you meant to be able to fully comprehend your position.

My apologies in advance for any offence that this inquiry may cause. I'm simply a naive 23 yr old looking to understand the market and as many of it's finer nuances as possible  just a tiny bit better. 
~sadr001

the electricity is generated by hydro, wind, gas, geothermal turbines.  
the electricity is transmitted by power lines many of which are well over 20 years old, and if installed today, will be expected to remain for over 20 more years.

So generations and transmissin don't really have any flexibility in price.  Having to power Huntly does cost a lot, even on standby. as the burners (word escapes me) have to be "kept warm", as they take considerable time to stoke up from cold.   Gas has a bit of cost, but the rate isn't really that flexible as the infrastructure is permanently in place.

However non of that is interesting to modern economics.

So there is a wholesale market.  Retailers can contract in future demands, and they can purchase excess supply (to meet peak demands/contract shortfall) on a spot market.  the spot market DOES vary wildly in price.   If the dams are full then the market will be cheaper; if it's not windy, and the rainstorms not overfilling the dams...like now... then the spot prices will be higher. thing is the actual cost of production isn't any higher, it's just profiteering on potential shortages, and forcing retailers to pay more in the cases such as now when we're unusually warm month (ie sunny, low wind, little rain) and the retailers were expecting blustry coldness.
 It is all just a way to find extras ways to create extra revenue from what is otherwise a very steady people-orientated system (one which our commercial department at CentralPower rejected as "unethical")

Sadr001   Yes.  Electricity prices do need to be based on the cost of production, and that of course needs to factor in replacement cost. 
But what people are identifying is that dodgy upwards revaluations of power stations has been a significant factor is the current cost calculation.   It's just been wrong, and has extracted cash from your pocket.  That needs to stop. 
There are all sorts of scenarios.  But one example is that the power stations on the Waikato were built and paid for by the taxpayer decades ago.  Financially that is history and done and dusted.  They need little maintainance and eventual major renovation will be relatively cheap given longevity of that work.   There is no justification for giving them some spurious value, multiple times their original cost, to justify spurious price increases.
But you are not naive Sad. Something tells me you understand that more than you reveal.  

Taxes will have to rise to compensate for the reduced income from the 51%state owned power companies.
We do not hear about this loss of income for the potential incoming loopy left wing coalition govt

Updated with latest 3News Poll results and more details of KiwiBuild policy.
cheers
Bernard

Don't forget to subtract the 5% Nat bias as found by Matthew Hooton's review of NZ polls, leaving the Nats at 40%.
 

That sounds a bit too large as an error, besides which watch out for the noise.  So if the Nat had 52% last time and 45% this time the better figure to trend on is more like 48%, but so down yes. Also is it 5% of 45% or 5% of 100%?   I always look at the trends and polls of polls myself. 
http://www.pundit.co.nz/content/poll-of-polls
Now if we see the next one at say 42% then that will be clearly be a Hager effect.  Its fascinating though that labour isnt picking up the deserters....the above site has some pieces suggesting why....
regards
 

Selling affordable homes at cost price to fhbs.

So gifting them some 100k plus free money most likely.

Seems fair.......... Glad my tax $ will be giving someone a 100k lump sum handout for arbitrary reasons...

Why are the older generation up in arms over the song “Kill the Prime Minister” when they enjoyed many violent songs themselves.

What about Johnny Cash who
“Shot a man in Reno – JUST TO WATCH HIM DIE”
Didn’t we enjoy that song?

And what about Tony Christie who took the law into his own hands and did a revenge killing because
“He did what he did for Maria”

When Kenny Rogers left the bar
“Not a Gatlan boy was left standing”
Isn’t that glorifying violence by the older generation?

Violence in songs goes back decades. At least back to the hanging of Tom Dooley

Why are the younger generation condemned for doing exactly what we did?

Unbelievable. I hate to break this to you but the man from Reno wasn't a real person. Then there is the whole revenge rape the daughter thing just over politics.

... very good point ... the level of vitriolic hatred vented towards the leader of the Gnats is something we've not witnessed since the days of Sir Robert " Piggy " Muldoon ...
 
Elements on the left have as seriously lost the plot , as their major party has lost it's way ... stealing Emails , then publishing them in book form , getting teenagers drunk and chorusing " f*&k John Key , and now this appalling song ...
 
... this is not robust debate ... this is dirty tricks ...

You do understand, don't you, that this song was out there over a year ago, where was the outrage then? Nowhere, as no-one had heard of it, so how come everyone does now, who brought it out into the open.
I take it that you realise that there has never been any love lost between Tom Sott and Kim Dotcom, so I doubt there would be any collusion there.
You do understand that this is just one person's song/sentiment it is hardly some sort of anthem.
Have you completely dissed the right because of Cameron Slater's hideous rant about a dead guy? I doubt it
The reference to Key's daughter was not on.
When Scott suggested he would kill John Key he probably meant his office.

If support for Labour fell by even more than for National, can we say still say it's because of the Dirty Politics book?